The 3rd place…

I was reading the Starbucks entry on wikinvest the other day. The bit that particularly interested me was the short entry on Starbucks 3rd place – a market positioning based on delivering a differentiated customer experience that became a catalyst for growth within the coffee shop market. growth.
The entry reads: Starbucks’ success is due in large part to the trendsetting triumph of its coffeehouses as an informal and convenient “third place” outside of home and work, ideal both for informal meetings and a quiet moment away from the hubbub of daily life. Wi-fi internet access in all stores also makes it a place where customers can work. Book and music events also take place at Starbucks, in accordance with the company’s goal of making each location a community center of sorts to garner the loyalty of local customers.

It made me wonder whether sport can build on it’s current position, for some customers at least, as being their 3rd place between work and home. What Starbucks did wasn’t new, coffee shops were already a 3rd place for some. But what Starbucks did was build it up into a relevant and compelling customer experience, and one they could use to grow their whole market (not just their share of the existing market).

Golf is a sport that often combines business with sport, and team sports like football create social and community bonds around playing. But how could a sport deliver a customer experience – consistently across all it’s touch points – that set a completely new standard? What would it take for a sport to no longer be seen by its participants as an either/or to working or spending time with the family? Could it be West Wing-style mass jogging networking events, using voice to text software on an iPhone? Or family canoeing days that start with brunch at a cafe, and end at a cinema?

The answer probably isn’t either of those suggestions. But it is out there…

Sustainable business growth at Nike

Last week, Nike announced their quarterly results. Constant dollar revenues grew 9%, with growth in every geography except for Japan. But it wasn’t the results themselves that interested me; but rather, how they explained their strategy for creating sustainable business growth.

Mark Parker, NIKE Inc.’s President and CEO, said “everything we do at Nike is based on delivering long-term sustainable growth. At the same time, we’re focused on delivering value to our shareholders in the near term. This is the balance you’ve come to expect from Nike, and it remains our commitment going forward.

We strike this balance by leveraging our significant competitive advantages, and chief among them are our authentic emotional connections with consumers, innovative product and retail experiences that lead the industry and a strong NIKE Inc. portfolio that gives us tremendous opportunities for growth and significant levers to drive profitability.

Consumer-driven companies with strong brands and compelling products will be in the best position to maintain their margins, and disciplined companies who are lean and focused on how they use their resources and who are aggressively seeking new ways to grow will prosper. Those who don’t won’t. In that sense, the roadmap for success in the future is no different than it’s always been”

Later in the call Charlie Denson, President of the Nike Brand, added: “As always, we’re focused on managing the business for sustainable long-term profitability. For the Nike brand, that means staying laser-focused on innovation, first at the product and brand level to drive the top-line growth and also driving innovation and discipline into how we run the business.”

While Nike is a multi-national commercial business, I believe there are some important messages here for the UK sports sector; whether the goal is increased profitability, more fans on seats or more participants on pitches, courts and roads.

Nike see their competitive advantages as including “authentic emotional connections with consumers, [and] innovative product and retail experiences”. And the Nike store environment and the style and tone of Nike’s services and communications would confirm this. They lead the market by listening to what consumers say about how they play sport – what it means to them, how it makes them feel and how they want to ‘consume’ it. They’re not bound by the rules of each sport, but rather by the needs of their consumers.

Many people associate Nike with product innovation, whether it’s Nike Air in the 80′s or Nike+ in the 00′s. But innovation also runs through how they manage their business processes and costs. Innovation and discipline is a powerful combination, as the likes of the Barcelona football team or the British cycling team regularly demonstrate. But how often do these twin traits of innovation and discipline emerge within the organizations and processes running sport?

So according to Nike, sustainable business growth comes from:
- being a consumer-driven company (clarity about why you exist, and where your strategic priorities are)
- creating authentic emotional connections with consumers (knowing who you exist for, and why you are still relevant to them)
- delivering innovative and compelling products (aligning what you provide to the people you exist for)
- providing innovative retail experiences (differentiating how you deliver your innovative products)
- embedding innovation into all aspects of the business (creating continuous improvement in both what you produce and how)
- being disciplined, lean and laser-focused (all business processes have a clear and relevant purpose, and are carried out both efficiently and effectively).

These traits exist across elite sport, and no doubt also reflect Nike’s origins with Bill Bowerman and Phil Knight. But they are just as relevant to how sports organisations across the market place could be operating. Can you share a good example of how these principles are being applied within the UK sports market…?

What’s the $ impact of a poor customer experience?

A new survey conducted by Greenfield Online, has investigated the economic impact of delivering poor customer experiences. The press release on Yahoo! Finance explains how they measured it, but some key take-aways are:

• 72% of both New Zealand & Australian consumers said they had ended a relationship with a company due to poor customer service.
• The Australian’s had ended 1.37 relationships each, at an average of AU$403 (US$338)
• The Kiwis were a little lower, ending 1.17 relationships at an average of NZ$386 (US$257)
• Indian consumers were the most sensistive to poor service, ending an average of 1.84 relationships each

While I’m always a little sceptical of the results of sponsored surveys (this was was sponsored by Genesis Communications Laboritories), the theme still raises a very interesting thought. It’s a commonly held belief that it’s cheaper to retain a customer than acquire a new one. However, to what extent are companies investing in evolving and innovating their customer experiences, to keep up with customer’s changing expectations?

Call centre’s have been around for a long time, and this research suggests that over half the consumers polled still prefer to use the phone, rather than newer channels such as email or web self-service. But recent call centre innovations seem to focus on developing cost-saving self-service, rather than improved customer experiences. And this survey suggests that it’s these same automated self-services, that feel the most challenging for these defecting customers.

Do you have an example of when a call centre either exceeded or failed to meet your expectations of service?

No friends, no access – no problem!

Ever wish you could have an exercise buddy to train with? Or wish there was a mass participation race near-by? In the old ‘real world’ you’d be stuck with no friends and no access. But not any more.

MapMyRun have partnered with the Columbus Half Marathon, to bring Columbus to the world. On August 30th, MapMyRun members around the world will join those in Columbus, running the 13.1 mile race. But they won’t just be there in spirit. By registering in advance, and entering the route they will run, they will be able to ‘compete’ with runners in the race and around the world. Better yet, if they succeed, they’ll even get a finishers hat, shirt and medal!

This is brilliant. Never again will race organisers have to turn runners away. Meanwhile, MapMyRun further engage their community of runners, connected by their common pursuit of running (or cycling, walking and skiing, which they also cater for).

Nike have been credited with a similar level of engagement and community around Nike+. And have also held virtual races around the world. Where MapMyRun could push the boundaries, is by extending this concept to those pursuing other sports too. Or perhaps by including video recording of your experience. And by tying it into existing real-life races, they can even cater for the virtually home sick. The loneliness of the long distance runner is no more.

This also has me thinking. What other events/brands restrict access to those being physically present? Orchestra’s already play “live” to theatres full of people around the world, who get dressed up to enjoy the experience of almost being there. Sports broadcast games to giant screens, where fans can gather, sing, drink, cheer and get almost the same experience as being there.

So where else could brands take this..?

How would customers reinvent your product?

Too often companies and sports teams take their performance and competition for granted, plodding along with little thought about serious innovation. It’s happened at organisations as diverse as Starbucks and the All Blacks.

Starbucks’ confidence had them rapidly expanding their footprint, rather than evolving their relevance as “the third place”. Equally the All Blacks threw out the innovative conditioning programme and ‘rotation policy’ that developed a large squad of world class players, and within 12 months are lamenting a lack of depth within their squad.

Three recent stories from google, demonstrate that to stay competitive requires a different mindset. One where you consider yourself the challenger, and never the champion.

First up, google took a video camera to Times Square in New York, and asked what many consider a simple question – “what is a browser?”. Yet the responses (see video below), demonstrate that we should never take our customer’s understanding of our product for granted.

Next google have given a sneak preview of google Wave, which has been described as what email would be like if it was invented today. And then last week, google announced that they are developing an operating system, Chrome OS, to rival Windows. This again sounds like great challenger thinking – “what would an OS be like if it was invented today”.

But stretching into operating systems also risks falling into the Starbucks trap. In trying to be everything to everyone, they could leave themselves open to a competitor re-inventing their core product. And ironically, if the Bing search engine takes off worldwide, that challenger could be Microsoft.

AirNZ’s ‘bare essentials’ ad campaign becomes an in-flight experience

Something wonderfully strange has happened to Air New Zealand – they’ve developed a personality! Following hot on the heels of their nothing to hide ads, comes their bare essentials in-flight safety briefing. I often rave about VirginBlue adding personality to their safety briefings, but AirNZ have successfully stripped away almost everything except the personality!

This is a great example of brand authenticity. They’ve taken what is already a catchy ad campaign and embeded it into their service proposition. The behind the scenes video shows how the campaign has engaged the brave staff in the ad, and my experience last weekend confirmed it (minus the body paint). The staff on my flight from Auckland seemed to be having more fun, the announcements felt less scripted, and they were giving out double helpings of cookies/lollie mix as standard (always a winner for me).

The customers are getting in on the act too, with a website to let them confess their own ‘nothing to hide’ stories. Putting the advert, safety video and bloopers on YouTube has added to the buzz, with overseas media like the NY Times and Daily Telegraph sharing the story.

The outcome has been game-changing. Airlines regularly struggle to get even a captive audience to watch the safety briefings. Yet AirNZ have already gained  3.5 million armchair viewers! Now that’s world-class thinking!

Creative thinking – a competitive edge

Joanna Maxwell recently won a prize for storytelling on slideshare. Her powerful yet simple presentation on creative thinking is so good, that I had to share it with you. If you don’t have time to skim through it now, Joanna’s 4 simple steps are:

1. Be curious – play
2. Make connections – try something (anything) new
3. Challenge yourself – take risks
4. Cultivate your ideas – give them time to grow

However, it’s well worth spending a few minutes absorbing the whole story. To paraphrase the opening line from Joanna’s site, why carry on working in black & white when you can work in colour?

Good enough, rarely is

Seth Godin posted last week on the all too congested road to mediocrity. And that taking this road is a daily exercise in deciding that ‘good enough is enough’.

Also last week, Manchester United sold Renaldo for GBP 80 million. A sum even Alex Ferguson described as “vulgar”. Regardless of your views on Renaldo, or his market valuation, its clear that he didn’t become that valuable by settling for mediocrity.

Achieving the dizzy heights of high performance, is not just about performing well in competition. It’s the daily decisions to spend extra hours in practice, when others have gone home. It’s about having the courage to risk failure, in the pursuit of new ways to beat opponents. And its about being fueled by a vision – a vision of performance beyond what mere mortals can achieve.

But the secret is, mere mortals can achieve such performances. Sure Renaldo has some natural talent, but no more so than many who have failed to rise above obscurity. Sporting greats such as Sebastian Coe, David Beckham and Dan Carter all admit that others have had the same raw talents that they possessed. But what “the settlers” lacked was the vision, belief and commitment to make the daily choice to rise above “good enough”.

Of course, the business world is no different. Where would we be today if Steve Jobs had accepted a mediocre, run of the mill idea for a music player or mobile phone? Aim high, and take the road less travelled.